Blue Whale is a blockchain project that promises to revolutionize the gig economy by cutting middleman costs and introducing traditional concepts like benefits and pensions to freelancers around the world. As a freelancer myself, this project seriously caught my interest. In this first post, we’ll take a look at the current state and weaknesses of the gig economy.
Before we dive into the details behind Blue Whale, let’s take a moment to understand what “gig economy” means. If I understand it correctly, “gig economy” refers to the various participants in the freelancing industry.
In the examples above, there are always three or more parties that make up the gig economy?—?freelancer, client, and a marketplace platform.
The world is becoming more Internet-centric each year, and the global surge in the number of freelancers reflects this fact. Between 2012 and 2017, the number of Internet users globally grew from 2.4 billion to 3.58 billion. In other words, over 1 billion new people were presented with the opportunity to market their freelance skills and services to the world in the last five years.
Millions of people around the world are making a successful living in the gig economy, so it must already be perfect, right? The Blue Whale Foundation doesn’t think so, and their primary arguments revolve around reliance on centralized marketplace platforms, job security and benefits, and expensive advertising and marketing costs.
Airbnb, Uber, and Fiverr are three examples of centralized marketplace platforms. These tech giants match freelancers with clients, and provide communication and transaction services. In exchange for this service, these platforms charge a commission rate or service fee.
Freelancing platforms don’t offer much job security and traditional employee benefits. For example, Uber treats their drivers as independent contractors. This means drivers do not receive health insurance and other employee benefits. Uber offers low-liability car insurance when the Uber app is on, but drivers must provide their own car insurance when the app is off.
Other downsides of freelancing include lack of traditional benefits like paid time off and retirement pensions. If a decentralized blockchain platform can generate enough value to offset funds to provide these benefits to freelancers, this would be truly amazing.
Blue Whale claims the average small business spends ~$10,000 per month or ~$120,000 per year on Google Adwords and Facebook ads. According to Sageworks, the average small business spends 1–5% of revenue on advertising. With this in mind, a business with a $10,000 per month ad budget should be bringing in between $2.4 million to $12 million in revenue. I wouldn’t classify these numbers in the small business category.
While the presented numbers may be a little inflated, I do get Blue Whale’s point. I ran a small business in the past, and it was difficult for us to spend our hard earned profits on Facebook ads ($1.72 Avg. CPC) and Google Adwords ($2.32 Avg. CPC). Another thing to consider is that CPC costs in freelancer-saturated industries are likely to be on the higher side due to more competition. For example, a freelancer running a web hosting or web design business (two highly saturated niches) may have a difficult time marketing their business without significant ad spend.
If a decentralized blockchain could help reduce advertising costs and level the playing field when it comes to the relationship between ad spend and ad display, that would certainly be a relief to many small business owners.
In the next post of this series, we’ll take a closer look at Blue Whale’s WORK System, and how it will be used to change the gig economy.
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